In Game Description via Character Origins in Character Creation:
Baldur's Gate is a city of opportunity and fair laws. The city prides itself on being an open place where anyone can become a citizen or start a new life, regardless of race or background. Adventurers from all walks of life comes from Baldur's Gate, where opportunity awaits on every corner.
Baldur's Gate is one of the location available to choose upon character creation. Selecting it will add the corresponding title 'of Baldur's Gate' to your biography.